LTD Observations so far....

I had a couple of questions in my mind about yesterday's analysis of laying the draw.

The first, and most obvious one, concerned the merits of hedging across the board at 1.8 (or other odds, more of which later) or leaving the loss sitting on the draw to catch late wins. When I 'what if'd' my spreadsheet with a fully hedged bet the result, so I thought, was clear cut in favour of leaving the big loss on the draw. Two things now make me question this....

In a comment on yesterday's post Anon kindly pointed out that I had made a mistake on one of the losing games, meaning I was showing a loss of £100 instead of £200. That changed things slightly.

The second point to consider was that a late goal does not of course rule out a draw! Bearing in mind that the exit point is usually somewhere between sixty and seventy minutes depending on the game there is a lot of potential for a 'gotcha'. So, prudence dictates that one ought to lay the leading team after a goal to cover some, if not all, of the liability sitting on the draw. In a Polish game tonight the away team scored at 75 minutes. They were 1.3 or so to lay even at that late stage, so to cover a liability of £180 would have cost £50 odd.

Taking both these thoughts together I am now minded to hedge completely, take the loss like a man and move on!

Which brings me to my second question... what odds to bottle out of the trade at??

Talking about this subject in chat earlier on I encountered one of those little gems of information that belonging to a community of traders sometimes imparts. Jon, aka Lambretta, said I should look at the 1.8 odds because it takes only 3 minutes or so usually for the draw odds to drop from 2 to 1.8. Now I've never timed it, but Lamb's a stats man and I am totally confident that he is right... and it makes sense if you think about it. Evens (decimal odds 2) is a tick size change figure - i.e. the odds change from .02 to .01 per tick. That is why the draw (and other outcomes) hover around evens for quite some time as traders try to take advantage of that minuscule difference. Once the barrier is broken the odds fall away quite quickly. Now, if it's 0-0 at the time the draw odds reach evens the chances of a goal in the 3 minutes or so it takes for them to drop to 1.8 are tiny so it makes much more sense to use 2 as the trade out point.

So now I am at the crossroads again! Changing the trade out odds to 2 probably tips me back in favour of putting all the liability on the draw rather than on hedging... so I'm going to work on that over the next few days.

For the benefit of those who hadn't spotted it, there's a simple trade buried in that rambling paragraph above! Back the draw at evens for £100, hedge out three minutes later at 1.8 for a green of £11.11 or lay for £100 at 1.8 for a free bet of £20 on the draw! Simples!